Oil Leak..Help.

i noticed this leak and tried to figure it out but reached a dead end and hope you guys can help me out in it.
this is Ultima 127ci, i found out its leaking somewhere behind the Sprocket, could it be the oil seal!

and is it normal the bush i'm holding is free going front and back or it should be tight?

thanks for the reply Jack,
so is it normal that the crank shaft extension spacer is moving front and back freely?

and how to remove this seal?!

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The spacer will be OK after the extension shaft and comp are bolted on, The seal can be popped out with a seal puller or screw driver, it should be pressed in but if you are carefull you can tap it back in with a piece of pipe or a big socket. I like to pre lube them, I pack the inner lip with vaseline or Lubriplate